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Designer Skin LLC v. S & L Vitamins, Inc., et al.
Unauthorized internet reseller of plaintiffs products is not guilty of trademark infringement, and does not cause actionable initial interest confusion, by using plaintiffs trademarks in meta tags of website at which plaintiffs and its competitors products are sold, and in...

Express Media Group, LLC, et al. v. Express Corporation, et al.

No. C 06-03504 WHA (N.D. Ca., May 10, 2007)

Purchaser Of Domain Name From Imposter Directed To Return Domain To Prior Owner

Court finds defendant, who claimed to have purchased plaintiffs’ Express.com domain for $150,000 from someone who purported to be, but was not, the domain’s Administrative Contact, guilty of conversion and directs defendant to return the domain to plaintiffs. Notably, the seller was contacted at the email address set forth for the domain’s Administrative Contact in the Whois Registry. Because plaintiffs had never voluntarily transferred the domain, the seller was a thief who could not transfer good title to defendant. As a result, defendant was not a good faith purchaser for value, but was instead, guilty of conversion. Finally, the Court held that defendant could not defeat plaintiffs’ claim to title by relying on the data contained in the Whois registry, as this was simply an information database maintained by private parties, and not the equivalent of a statutorily created title registration system. This data, and particularly the Administrative Contact’s email address, had been changed without plaintiffs’ knowledge or consent.

Plaintiff Express Media Group LLC (“Express Media”) purchased the domain name Express.com in or about 2002, which Express Media then transferred to its wholly owned subsidiary, plaintiff DVD.com. Plaintiffs registered this domain with Network Solutions. Susan Tregub, a lawyer, was listed as the domain’s Administrative contact. The registration contained accurate contact information for Ms. Tregub, including her email address, street address and telephone number. Plaintiff DVD.com was listed as the site’s Technical Contact.

Sometime in October 2004, this registration information was changed without plaintiffs’ knowledge or consent. While Ms. Tregub was still listed as the site’s Administrative Contact, her contact information was replaced with false contact information and DVD.com was deleted entirely from the site’s registration.

Shortly thereafter, defendants contacted an individual they allegedly believed was Ms. Tregub at this new, falsified email address, and arranged to purchase the Express.com domain for $150,000. Defendants acknowledged at the time of their purchase that the domain was “likely” worth at least $1 million.

When plaintiffs learned of this transfer they demanded the defendants return the domain. When defendants refused, plaintiffs commenced this suit, charging defendants, inter alia, with conversion.

In California, “conversion is the wrongful exercise of dominion over the property of another. The elements of a conversion are the plaintiff’s ownership or right to possession of the property at the time of the conversion; the defendant’s conversion by wrongful act or disposition of property rights; and damages.”

The Ninth Circuit has held that a domain name is property capable of being converted.

The Court held plaintiffs had established each of the elements necessary to establish a claim for conversion. Plaintiffs had shown that they owned the domain, and had an immediate right to possess it, by showing they had purchased it, and had not transferred it to a third party.

The Court rejected defendants’ claim that plaintiffs did not hold good title to the domain at the time of defendants’ acquisition because plaintiffs were not so identified in the registration information then on file with Network Solutions and the Whois registry. Such information, held the Court, is not the equivalent of a statutorily created title registry. It is, instead, merely a database maintained by private parties. It thus does not conclusively establish that a party does, or does not, have title to the domain in question. Said the Court:

Defendants’ arguments rest on changes to the Whois records and the registration contact information for the domain name. Such records, however, are not the equivalent of statutorily-created title systems. They are privately maintained systems for providing contact information and keeping records for domain names.

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Changes to the registration information do not constitute a transfer of ownership.

The Court held that plaintiffs had also established that defendants had converted plaintiffs’ property by wrongful act, by maintaining possession thereof after plaintiffs’ demand for the return of the property.

Finally, plaintiffs had shown they had sustained the requisite damage by showing they had been deprived of the use of the domain name by defendants’ actions. As a result, the Court held defendants’ guilty of conversion.

In reaching this result, the Court rejected defendants’ claim that they were a good faith purchaser for value under California law. “As a general rule, an innocent purchaser for value and without actual or constructive notice that his or her vendor has secured the goods by a fraudulent purchase is not liable for conversion.”

The same does not apply to a party that purchases property from a thief as a thief cannot convey good title. The Court held that defendants had purchased the property from a thief, and thus rejected their good faith purchase defense, because plaintiffs had never voluntarily transferred the Express.com domain to a third party.